HDTV Almanac

EnergyStar is the joint project by U.S. Environmental Protection Agency and the U.S. Department of Energy that is designed to help consumers identifiy energy-efficient products before they make a buying decision. The problem of rating flat panel televisions is that it is a moving target. The average screen size is a lot larger than it was for picture tube (CRT) models, so it is reasonable that LCDs and plasmas draw more power. But the two technologies have different power profiles; LCD power consumption is governed largely by how bright the backlight shines, while plasma power use is affected by the bright and dark areas of an image on the screen. In addition, both technologies have been making marked improvements in energy efficiency.

As a result, the EnergyStar program has developed standards that change as time progresses. In order to wear the EnergyStar logo, a product must conform to the current standards. And new standards take effect tomorrow. The new requirements are based on the area of the display surface. High definition sets — which EnergyStar defines as having more than 480 lines of resolution — get to use more power than standard definition. There are different formulas for different screen sizes, but here are some examples. In order to meet the EnergyStar requirements, the set must not use more than the following amount of power (in Watts) at is maximum while on:

20″: 66 Watts
32″: 120 Watts
42″: 208 Watts
50″: 318 Watts
60″: 391 Watts

The next set of requirements have not yet been determined, but are slated to go into effect on September 1, 2010. You can find the specifications and other details at http://www.energystar.gov/ia/partners/product_specs/eligibility/tv_vcr_elig.pdf.

Energy consumption is definitely an issue with large televisions; they are the equivalent of having a handful of lightbulbs turned on when you’re watching them. Manufacturers understand that consumers care about “green” issues, both from the environmental side as well as spending as little “green” on electricity as possible. You can expect that the sets will become increasingly energy efficient with each new model series.

A report in the Wall Street Journal on Tuesday confirms what many analysts have been saying for some time; sales of large flat panel TVs are in trouble, and inventories are piling up for both manufacturers and retailers. The latest evidence? Sales of digital converter boxes are exceeding projections. More people are simply buying converters for their old TVs that get their signal over the air, rather than buy a new set with a digital tuner.

According to the Journal, Radio Shack attributed an 8% boost in quarterly profit to sales of converter boxes. The article also cites a Best Buy representative reporting that converter sales have been higher than expected.

So not only are people buying smaller flat panels instead of larger ones, in many cases they’re not buying new flat panels at all, but just getting converter boxes instead. With the federal $40 rebate coupon program, most people will only be spending $10 or less out of pocket for the conveters. In today’s environment of economic turmoil and consumer uncertainty, buyers are more likely to settle on the $10 expense than the hundreds of dollars it costs for even a small flat screen TV.

Do you relish standing in line for five hours in the cold and dark, just to get a shot at one of the Black Friday bargains? If not, you might be interested in the shortcut that Best Buy has announced. As part of its Black Friday VIP contest, you can be one of 25 lucky winners who will get a special shot at the Black Friday bargains.

Winners will be chosen by November 24th, one for each of 25 different markets. (In my area, the Philadelphia-area winner will shop at the Depford, NJ store.) Each winner will receive a limo ride for themselves and three guests to the store in time for a 4:30 AM shopping spree ahead of the hordes, where they can buy up to four of the doorbuster specials. Oh, and Best Buy will also give the winner a $1,000 gift card to use to buy those bargains. And you get a video camcorder so that you can record the event.

How do you win? Enter at the contest site, and write up to 250 words about “What do you do to make the day after Thanksgiving a particularly fun and special day?”

Frankly, I’m not one to stand in line. I’d rather wait two hours than stand in line for one. But getting a free ride and beating the rush could make the event a lot more fun. And I expect that you’ll find that the $1,000 gift card will go a lot farther than you might imagine this year, especially if you’re shopping for an HDTV.

A press release from Futuresource , a British market research firm, makes some interesting observations about the state of the world economy and its impact on consumer electronics. Their numbers are based on United Kingdom measures, but I expect that for this purpose, they are similar enough to the situation in the USA for argument. The company went back to the “economic slump” of 2001 to see what happened in consumer electronics, and found that sales of digital cameras and DVD players rose quickly even though the rest of the economy was slowing down. They cite a similar situation in the early 1980s and sales of VCRs.

The release then states the following:

“New figures released by Futuresource last week show the markets for flat panel HDTVs and Blu-ray disc players will continue to expand in Europe and the USA this year, with the majority of consumers continuing to migrate up to more expensive, better specified products.”

The key to their analysis is what they call the “staycation” attitude on the part of consumers. People are anxious about money and their jobs, so they plan to stay home rather than spend a lot on a nice vacation. As a consolation, they will buy home electronics to compensate, and to give them something to do when they stay home.

This is the same behavior that we called “cocooning” during the last downturn, and it has some merit. However, I think that Futuresource has extrapolated the past too much into the current conditions. After the downturn following 9/11 in 2001, consumer confidence was certainly shaken, but they were not hit too badly economically. Not a lot of jobs were lost, and people still had ready access to credit – including home equity lines — with which to buy whatever they wanted.

Things are different now. Even before the stock market began to shrink like a wool sweater in hot water, consumers were worried about keeping not just their jobs but even their homes. Back-to-school spending was put off until the last possible moment, and even then was less than anticipated. If families are going short on their kids in September, you know that the Wall Street losses and huge lay-offs are not going to make them more likely to spend. And the credit industry meltdown means that more and more people will have to pay cash for any “staycation” purchases.

Futuresource does acknowledge that people are shopping for 32″ HDTVs instead of 42″ and larger models, which is an enormous difference in price and size, but they base their analysis on units without considering the size of the sets to be sold. If a 32″ model costs half as much as a 42″, and everyone were to switch from the larger to the smaller, then the retailers and manufactuters will only make half as much. Prices are already depressed from last year’s low levels, so this means that revenues for HDTV sales could be way down, even as the number of units sold grows.

The company paints a much rosier picture with their numbers than I think will be the case. And I’m not even certain that the sales they predict will materialize. Manufacturers and retailers have already slashed prices on their products, but I expect that they’ll find they need to cut them even more in order to get people to open their battered wallets between now and the holidays.

In a press release earlier this month, Apple touted the fact that it has HD versions of popular network TV shows available for sale on its iTunes service. Here are shows offered in HD on iTunes by four major networks:

ABC:
“Brothers & Sisters”
“Desperate Housewives”
“Dirty Sexy Money”
“Eli Stone”
“Grey’s Anatomy”
“Life on Mars”
“Lost”
“Private Practice”
“Samantha Who?”
“Ugly Betty”

CBS:
“CSI”
“CSI: Miami”
“CSI: New York”
“NCIS”
“Numb3rs”

FOX:
“Bones”
“House”
“Prison Break”
“Sons of Anarchy”

NBC:
“30 Rock”
“Heroes”
“Kath & Kim”
“Knight Rider”
“Law & Order: SVU”
“Life”
“Lipstick Jungle”
“My Own Worst Enemy”
“The Office”

Other HD shows include the SCI FI Channel’s “Battlestar Galactica” and “Eureka,” and USA Network’s “In Plain Sight,” “Monk,” “Psych,” and “The Starter Wife.”

How big a deal are downloadable HD television episodes on iTunes? After all, anyone with a TiVo can grab them and watch them when they want. According to Apple, more than 1 million HD episodes were downloaded in the first month that they were offered. And keep in mind that iTunes has sold more than 200 million standard definition episodes since it started selling the shows.

Are people willing to pay money to download television shows that they could watch for free over the air (or as part of their cable or satellite service)? It is clear that they are doing just that. Does this mean that viewer purchases (or subscriptions) represent a viable business model to pay for the production and distribution of this content? That’s not as clear at this point, because the iTunes sales are just a tiny portion of the revenue stream that is dominated by broadcast advertising. Still, it’s an interesting start, and one worth tracking.

I’ve been writing about how bad the HDTV market is going to be this winter, and yesterday, a big shoe dropped. When times get tough, you’d expect that the middle and lower tier companies might struggle, finding it more difficult to get shelf space and make sales. You’d think that the blow would be buffered a bit for the top brands, since they are well established and the people with money will still buy the best.

Well, Sony announced revised forecasts for the rest of its fiscal year (ending in March 2009), and the revisions were sharply downward. In July of this year, the company forecast “operating income” of 470 billion yen. (If you’re like me, my eyes tend to glaze over when I see values in foreign currencies. US$1 is roughly 100 yen, so we’re talking about $4.7 billion.) Now the company is predicting that it will be about 200 billion yen, a drop of 270 billion yen (and more than half of the original forecast). Thats about a $2.7 billion drop. Yes, that’s billion with a very big B.

Now a large portion of this revised forecast has to do with changes in foreign exchange rates and stock market declines, but the part we’re interested in is the downward revision for electronic sales. This includes Sony’s LCD HDTV business, as well as their digital cameras and other electronics. The forecast has been revised downward by 90 billion yen, or about $900 million. Yikes. Sony cites increased competition and slowing economies worldwide as the cause for decreased demand for their products.

These are big numbers, made by one of the biggest names in the business. It’s just one more data point that indicates that we’re headed for a flat panel train wreck this holiday buying season, and I expect that there going to be bargains to be had (provided that you got your discretionary cash out of the stock market in time).

I was one of the beta testers for Joost, the site that offered streaming video — often in higher definition than you get from some Web video sites — of a wide range of content. It offered old made-for-TV movies, current TV episodes, music videos, and a ton of specialty programming that was aimed at a younger demographic than the one I represent. The site used short and fairly innocuous commercial advertisements to fund the site.

Part of the design was that you had to download and install software in order to use the site. Last week, that changed as a new Joost appeared. Using Flash, there now is no need to download anything; just click and watch. The user interface has changed, probably for the better, though I still find it difficult to find the shows I want to watch. The new interface puts more emphasis on social networking; the home page has a Twitter-like feature that lets you know what other people are watching on Joost right now. I don’t expect to hang out on the site enough for this to be an interesting feature, but I can see how some people might get into it.

The site now has more than 8,000 free hours of video content, including more than 18,000 music videos. The content comes from major networks, including CBS, ABC, and Comedy Central, as well as Warner Brothers Television Group, which provides episodes of many of its popular series.

Joost still is not a perfect solution to making quality video easily available over the Internet, but it continues to make progress. If you haven’t checked it out, take advantage of the new no-download design and watch a classic Bruce Lee movie, episodes of Babylon 5, or music videos from your favorite artists. Let me know what you think.

Okay, maybe it’s just because it’s so late at night (or so early in the morning, depending on your perspective), but I feel a good rant coming on. Is anyone else out there getting fed up with the “bugs” and “crawls” and other visual junk that the networks are throwing on the screen while you’re trying to watch a show?

Now, I’m not talking about the news channels or weather channels or sports channels or business channels that do their best to induce a catatonic seizure by providing three or more streams of information — some visual, some text, and some auditory — all at the same time. Hey, that’s what they do, and you know to expect that from them. And I’m not talking about major network coverage of sporting events; with all the fantasy leagues these days, you want a text crawl at the bottom to keep you posted on other games.

No, I’m talking about the run-of-the-mill broadcast network sitcoms and dramas and (sigh) “reality” shows. It started with the little network bug that would appear for a while after commercial breaks, just to remind you which network you were watching. Then the bugs stayed on all the time in the lower right corner, like a numb toe that you just don’t feel after a while. But the networks didn’t stop there. They’d flash a promotion for another show during the current show’s credits. Then they’d put a text announcement on the screen during the show. Then the announcements added graphics, and animation, just to make sure that you’d stop paying attention to the show you were trying to watch, so that you’d see this network advertisement.

I can’t believe that I’m the only one who finds this practice profoundly irritating. The promos for the Olympics last summer were extreme offenders. I find this to be even more annoying than radio DJs who insist on talking over the music that they’re playing. Hey: if your message is so important, let it stand on its own. But don’t overlay it on the content that I’ve chosen to watch. And I can’t believe that the creative people who put the content together are happy about having their art scribbled on this way.

Unfortunately, I don’t know how to fight back. Like annoying telemarketing calls, they probably are effective, so there’s a financial incentive for the networks to continue the practice. Maybe their online episodes don’t have the bugs and promos and other junk cluttering up the shows. Maybe I’ll just have to watch the online episodes, and give up on the broadcast content altogether. But I have to say that it bugs me.

Some analysts have questioned whether or not Circuit City will survive until the end of 2009. Now there appears that the company may not finish 2008. A report in the Wall Street Journal and elsewhere yesterday indicates that Circuit City may shutter as many as 150 of its 712 stores and lay off thousands of employees in an attempt to stay afloat through the holiday shopping season. The struggling chain turned away a $1 billion buyout offer from Blockbuster earlier this year. (Blockbuster must be feeling pretty good about that outcome at this point.)

Circuit City is getting squeezed by buying clubs like Costco and by Wal-Mart, which also carry name brand flat panel TVs and other consumer electronics. The gloomy economic picture is not helping matters at all, especially now that consumers can’t use home equity loans and cheap credit cards to finance big ticket purchases like HDTVs. Even with these cuts and closures, it may not be enough to save the company.

As consumers — especially if you have a Circuit City nearby — we’ll want to monitor the closings. The company will have to liquidate its inventory in an attempt to raise cash in a hurry, and if people aren’t buying, you may well be able to get some attractive bargains before the doors close.

What’s happening to the LCD HDTV market? One way to look at what’s ahead is to look “upstream”. By this, I mean look at what’s been going on at the manufacturer level. They make the panels that will go into the televisions that will be sold this holiday season. So what’s happening upstream?

Orders are way below projections, and LCD panel factories from Taiwan to Korea have been throttling back production for months, trying to stem the tide of oversupply. DisplaySearch publishes a free PriceWise analysis of panel prices. From July to the first half of October, the typical price for a 1080p LCD HDTV panel (not the whole television; just the display panel) has dropped from $505 to $440. And it has dropped another $10 in the second half of October. That’s a total of nearly 15% in three months. Ouch!

Some analysts say that people will be buying plenty of LCD TVs this holiday season, but that they’ll be getting smaller, more affordable units instead. The manufacturing picture isn’t too cheery here, either. The price for a typical 32″ WXGA (720p) LCD TV panel was $285 in July, falling to $245 in the first half of October, and another $10 in the second half of the month. That’s nearly an 18% drop in three months.

Demand for flat panel TVs is what economists call “elastic“, which means that as the selling price goes down, the demand increases. The problem is that there was a good case of hardening of the consumer spending arteries in full swing by last summer as consumer confidence plummeted and concerns rose. The recent international credit melt-down has not done anything to improve the situation, which means that prices will have to drop a lot more in order to entice buyers to forget their worries about their job situation or mortgage payments and shell out some big bucks for a new TV when their old one is working fine. And those drops will be painful to the manufacturers and retailers.

A 15% to 18% drop in the cost of the major component of an LCD TV is a sign that manufacturers are getting desperate to move product. I stand by my prediction that we’re going to see a bloodbath in the flat panel TV market by the end of the year.